Buying a Certified Pre-owned Vehicle (CPO) – Part III
I recently helped my daughter decide on which used SUV to buy. She was surprised when I recommended that she and her husband look at certified pre-owned (CPO) vehicles at major dealerships. I have written extensively on how to buy and sell vehicles privately and online.
I explained to my daughter that she has two options to be fully protected when buying pre-owned vehicles:
1. Buy a certified pre-owned vehicle (CPO) from a dealer
2. Create your own “virtual” CPO program.
The benefit of buying from a dealer is that you can be in and out in a few hours. Dealers can provide financing and complete all
the paperwork, saving you a trip to the DMV. I recommended this option for my daughter’s family because of their busy lifestyle.
However, consumers generally pay a premium when buying a CPO vehicle from a dealer. When I was an Internet Manager for a major dealership, the added cost for certified vehicles was in the range of two to fivepercent. Some luxury models were more, up to eight percent.
The good news for savvy buyers: the benefits of a CPO program don’t diminish even if you make a steal-of-a-deal on the certified car itself. So the actual added price to the consumer for a certified vehicle will depend upon how good you are at negotiating price.
Create a Virtual CPO
There are three components to any certified program. However, creating your “virtual” program adds a significant amount of work to the process. Also, keep in mind the basics of buying any used car. You may want to read my free report, The 8 Biggest Mistakes Used Car Buyers Make and How to Avoid Them (seebelow).
Your virtual CPO program will include:
1. Certification/selection. There is no actual entity to officially certify your car. However, selecting an equivalent vehicle means narrowing your search to only recent model years with a limited number of miles.Because both factors have a direct impact on the price, you’ll have to set these limits based on the delicate balance between your needs and your finances.
If buying privately, have your mechanic perform a pre-purchase inspection. A detailed checklist and a competent mechanic ensure that you’ll know what deficiencies are present so you can negotiate a lower price. For example, ask for the cost of repairs to be subtracted from the lowest price negotiated. Or simply say no to a vehicle with too many problems.
If purchasing from a dealer, ask to see the vehicle inspection report. If one is not available, in most cases it’s best to pay your mechanic to complete his inspection before proceeding.
2. Warranty. Private companies sell extended service contracts, also known as extended warranties. This allows you to a vehicle from a private seller and get an extended warranty for added protection. Many buyers assume incorrectly that these are only available from dealers.
A vehicle’s remaining manufacturer’s warranty is taken into account when getting quotes on extended warranties from private companies. Perform an Internet search to find out which companies to contact for quotes for the specific vehicle you are looking to purchase.
If buying from a dealer, remember that extended warranties are high-profit items and dealers are always negotiable. You can comparison shop by getting a quote from a private company online (see above).
When comparing one program to another, be sure to consider what is covered and what is not covered, as well as price.
3. Extras. Certified programs often include extras such as roadside assistance, trip interruption programs, free vehicle history reports, and other goodies. Roadside assistance is available from many sources, including the American Automobile Association, insurance and even phone companies. You can purchase vehicle history reports directly from CARFAX.com or AutoCheck.com. You may have to do without some additional benefits if you go the virtual CPO route.
If you have the time, energy, and inclination, developing your own virtual CPO program can save you money.But remember, it’s a lot more work and it’s buyer beware. Good luck!
Missed the beginning of this series? Review Part I – Part II.
———————-
As an Automotive Journalist, L. James Johnson contributes articles to High Gear Media Automotive websites, where this article was first published: http://www.allcaradvice.com/blog/1045179_buying-a-certified-pre-owned-vehicle-cpo-part-iii.
———————-
L. James Johnson’s new book, HELP! I Gotta Sell My Car NOW! New Rules for Selling Your Vehicle Online! is available for download at BayAreaCarGuy.com. You can also download his FREE report, The 8 Biggest Mistakes Used Car Buyers Make & How to Avoid Them!
Review this Product